Financial Crimes Enforcement Network (FinCEN)
Geographic Targeting Orders issued.
On January 13th, the Financial Crimes Enforcement Network (FinCEN) issued Geographic Targeting Orders (GTOs) that will temporarily require certain U.S. title insurance companies to identify the natural persons behind companies used to pay “all cash” for high-end residential real estate in Manhattan, New York City as well as in Miami-Dad County, Florida. FinCEN is using its risk-based approach to combat money laundering in the real estate sector. The GTOs are effective from March 1, 2016 through August 27, 2016.
Advisory issued for AML/CFT deficiencies.
On January 19th, FinCEN issued an advisory on the Financial Action Task Force-(FATF-) identified jurisdictions with Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) deficiencies. The FATF has called upon its members, including the United States, to impose countermeasures and consider the risks arising from these AML/CFT-deficient jurisdictions. FinCEN, in its advisory, urged financial institutions in the U.S. to apply enhanced due diligence.
Office of Foreign Assets Control (OFAC)
OFAC takes on cybersecurity issues.
The Office of Foreign Assets Control (OFAC) published regulations to implement Executive Order (EO) 1934, which was issued in April of 2015. The EO, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” creates a new, targeted authority for the U.S. government to better respond to significant cybersecurity threats, particularly in situations where malicious cyber actors may operate beyond the reach of existing authorities.
On January 7th, OFAC singled out a key Hezbollah support network by designating a financier who has received millions of dollars from Hezbollah to invest in commercial projects supporting the group. The action continues the Treasury’s ongoing efforts to target Hezbollah and its supporters. As a result of the action, all assets of those designated that are based in the U.S. or in the possession or control of U.S. persons have been frozen, and U.S. persons are generally prohibited from engaging in transactions with them.
California company to pay $140,400 settlement.
A company based in Irvine, California, along with its subsidiary, has agreed to pay $140,400 to settle potential civil liability to alleged violations of the Cuban Assets Control Regulations. OFAC determined that the company did not voluntarily disclose the apparent violations and that they constitute a non-egregious case. Both the statutory maximum civil monetary penalty and base penalty amounts for the apparent violations totaled $260,000.
Federal Deposit Insurance Corporation (FDIC)
December enforcement actions published.
On January 29th, the Federal Deposit Insurance Corporation (FDC) released a list of orders of of administrative enforcement actions taken against banks and individuals in December. In total, there were 41 orders and one notice issued.
Comments sought on how small banks are assessed.
The FDIC issued a revised proposed rule to amend the way small banks are assessed for deposit insurance. According to the press release issued on January 21st, the proposed rule would affect banks with less than $10 billion in assets that have been insured by the FDIC for at least five years by updating the data and revising the methodology that the FDIC uses to determine applicable risk-based assessments.
List of banks examined for CRA compliance issued.
At the beginning of January, the FDIC issued its list of state nonmember banks evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in October 2015.
Office of the Comptroller of the Currency (OCC)
$49 million in civil money penalties assessed.
On January 5th, the Office of the Comptroller of the Currency (OCC) terminated mortgage servicing-related consent orders against two financial institutions and issued civil money penalties (CMPs) against the banks for previous violations of the orders .These CMPs included $48 million assessed against one bank and $1 million against the other. The penalties will be paid to the U.S. Treasury.
Enforcement actions and terminations released.
On January 15th, the OCC released its list of new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. These lists are released regularly and include all Cease and Desist Orders, CMPs, and Removal/Prohibition Orders.
Dodd-Frank stress test scenarios released.
At the end of January, the OCC released economic and financial market scenarios to be used in the upcoming 2016 stress tests for covered institutions with more than $10 billion in assets. These include baseline, adverse, and severely adverse scenarios, as described in the final rules implementing the Dodd-Frank Act of 2010.
Securities and Exchange Commission (SEC)
FAST Act implemented.
The Securities and Exchange Commission (SEC) announced the approval of interim final rules regarding provisions of the Fixing America’s Surface Transportation (FAST) Act. The FAST Act revised financial reporting forms for emerging growth and smaller reporting companies.
Whistleblower awarded over $700,000.
The SEC announced a $700,000 award to a company outsider who conducted a detailed analysis that led to a successful SEC enforcement action. The whistleblower was commended for his voluntary submission of high-quality analysis. The whistleblower program at the SEC has awarded over $55 million to almost two dozen whistleblowers since the program’s inception in 2011.
Corporation to pay $2 million for misstated financials.
On January 20th, the SEC announced that a mortgage servicer agreed to pay a $2 million penalty after an investigation determined that the company inaccurately disclosed to investors that it independently valued these assets at fair value under U.S. Generally Accepted Accounting Principles (GAAP). As a result, the company misstated its net income for 2013 into 2014.
Consumer Financial Protection Bureau (CFPB)
Public feedback south on mortgage lending information guidelines.
On January 7th, the Consumer Financial Protection Bureau (CFPB) announced that it had begun seeking public feedback regarding the resubmission of mortgage lending data reported under the Home Mortgage Disclosure Act (HMDA). This hearkens back to the October publication of a final rule updating the reporting requirements of HMDA regulations.
Car dealer to pay $800,000 in penalties and restitution.
The CFPB announced action taken against a buy-here pay-here used card dealer for abusive financing schemes, amongst other alleged crimes including misleading consumers and hiding auto finance charges. The dealer is required to pay $700,000 in restitution to harmed consumers, with a suspended civil penalty of $100,000.
CFPB monthly snapshot released.
On January 28th, the CFPB released their monthly snapshot examining consume complaints concerning financial services that run the gamut from debt settlement and check cashing to money orders and credit repair. The report highlighted the prevalence of fraud and consumer concern with reliable customer service.
National Credit Union Administration (NCUA)
Restitution of almost $60,000 ordered.
The National Credit Union Administration (NCUA) announced a prohibition order in late December preventing an individual from participating in the affairs of any federally insured financial institution. The individual was ordered to pay restitution in the amount of $54,595.21 after pleading guilty to charges of embezzlement and false pretenses.
Partnership to help low-income credit unions.
The NCUA and the U.S. Treasury Department’s Community Development Financial Institutions Fund have entered into a partnership whose agreement will help to streamline the application process for low-income credit unions to become certified as Community Development Financial Institutions.
CUSO Registry announced.
The NCUA announced that credit union service organizations (CUSOs) have 60 days, between February 1 and March 31, to register with the NCUA’s CUSO Registry, the new online system for CUSOs to report their operational and financial information directly to the agency. As part of the launch, the NCUA will host a free webinar on February 11th.
Federal Reserve Bank
First enforcement action of the year announced.
On January 7th 2016, the Federal Reserve Board announced the execution of the enforcement action against Covenant Bancgroup in Alabama. The full list of 2016 enforcement actions, as well as past enforcement actions, can be found on the Federal Reserve’s website.
Dodd-Frank stress test scenarios released.
Along with the OCC, the Federal Reserve Board has released supervisory scenarios for the 2016 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises. Furthermore, the FRB and OCC have issued instructions to firms with assets over $10 billion participating in CCAR. As the guide states, the Dodd-Frank Act requires the Board of Governors of the Federal Reserve System to conduct annual supervisory stress tests of bank holding companies (BHCs) with $50 billion or greater in total consolidated assets.
FRB extends comment period for proposed rules.
The Federal Reserve Board announced extensions for the comment period for two proposed rules: the first, a rule to strengthen the ability of the largest domestic and foreign banks operating in the U.S. to be resolved without extraordinary government support or taxpayer assistance, was extended until February 19th. The second, a proposed policy statement detailing the framework the Board would follow in settling the Countercyclical Capital Buffer (CCyB), was extended until March 21.
Department of Justice
Five residents to pay almost $4 million for mortgage fraud scheme.
On January 12th, the Department of Justice’s (DOJ’s) Office of Public Affairs announced that five Michigan residents were sentenced to prison for their roles in a multi-year mortgage fraud conspiracy. The residents were ordered to pay restitution in varying amounts totaling $3,566,408, in addition to prison times ranging from one day to 33 months in prison.
Human trafficker sentenced to life in prison.
A woman behind a Houston sex trafficking ring has been sentenced to life in federal prison following conviction on January 20th. This is a landmark sex trafficking case, and one of the most significant in scope and magnitude to be tried to a verdict of guilty. The woman was convicted on all counts – conspiracy to commit sex trafficking, conspiracy to harbor aliens, aiding and abetting to commit money laundering and conspiracy to commit money laundering.
Individual to pay $2.55 million for Ponzi scheme.
The DOJ announced that the CEO of purported real estate development firm The George Group was sentenced to 108 months in prison for his role in a $2 million investment fraud scheme. The CEO, a former NBA player, was also ordered to pay $2.55 million in restitution. A forfeiture money judgment of $2.55 million was also entered.
Other Regulatory Bodies
Lenders to pay $4.4 million to settle deception charges.
On January 5th, the Federal Trade Commission (FTC) announced charges against two payday lenders for illegally charging consumers with undisclosed and inflated fees. Each lender paid $2.2 million and collectively waived $68 million in fees to consumers that were not collected.
Three home loan modification companies charged with FHA violations.
On January 12th, the U.S. Department of Housing and Urban Development announced that it was charging three California home loan modification companies and their agents with violating the Fair Housing Act. Allegedly the companies were targeting Hispanic homeowners for illegal or unfair loan audit and loan modification assistance.
Goldman Sachs announced $5.1 billion settlement.
On January 14th, Goldman Sachs Group Inc. agreed to a $5.1 billion civil settlement with regulators concerning faulty mortgages. The settlement will resolve claims stemming from the marketing and selling of faulty securities to investors. According to a Bloomberg article, Goldman Sachs will pay a $2.39 billion civil penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief under an agreement in principle with a U.S. task force.